The city of Sioux Falls is looking for a short-term vendor to operate Falls Overlook Cafe through the holiday season. / Emily Spartz / Argus Leader

Written by

Kermit Staggers

The former operator of The Overlook Cafe at Falls Park says kitchen limitations and city rules for the restaurant make it difficult to do business there.

Tony Kellar, co-owner of Utopia, which had the city management agreement to operate the cafe, closed Oct. 20 after giving a 90-day notice. The agreement was set to expire Dec. 31.

The city now is looking for a short-term concessions vendor for Winter Wonderland, the seven-week holiday celebration which starts Nov. 16. They also hope to secure by spring a long-term management agreement with catering and a full-service cafe, said Dave Fischer, assistant director of Parks and Recreation.

Kellar said building inspectors in May told him he couldn’t cook certain menu items using the oven, which he had done for months. He called it a reinterpretation of codes.

Fischer disagrees. He said cooking raw meat never has been allowed because of the type of hood system in the kitchen.

“They said you can’t do this anymore,” Kellar said. “That’s where we parted ways on the situation. ... We had to really assess it — yeah, we can do a cold-cut deli, but you won’t attract caterings by having a deli. So we just decided there was a lot of hardships to doing business in the building.”

Fischer said city staff noticed grease buildup on the ventilation system, called in a vendor to clean it and learned food was being prepared incorrectly, which sparked the inspection.

“There was never a reinterpretation of codes,” he said. “That’s always been the case. Utopia thought they were in code, but in the end they weren’t.”

The Overlook Cafe is a city-owned facility that’s managed by a private vendor. The city covers utilities and pays for incidentals, repairs and building maintenance, Fischer said.

The first operator was Savor, the food and beverage arm of SMG, which operates the Sioux Falls Arena and Orpheum Theatre. Crystal Ice Concessions took over in May 2007. Kellar said Utopia started working under Crystal Ice Concessions and got the management agreement in February 2011.

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The city suggested using pre-cooked meat, but a former tenant said using the oven for baking was OK, so that’s how Kellar prepared his burgers and other food. Kellar pulled burgers and other over-cooked items off the menu the day inspectors told him he was out of code.

The kitchen’s hood system is not made for smoke or grease particles, Kellar said, meaning operators can’t fry, grill or sauté food. The kitchen is small with no walk-in coolers or freezers. Alcohol sales also are prohibited at the cafe but allowed for private parties. And the city requires the cafe to close by 8 p.m. in summer during peak season.

Kellar said hot dogs, nachos and deli sandwiches work well in the summer but don’t attract catering gigs. Utopia did about 60 such events a year, and Kellar estimates he canceled 15 holiday parties and at least six weddings because of the closure.

“If we didn’t have catering, we wouldn’t make it through the winter, and it’s hard to attract catering when you only have deli meat,” said Kellar, who plans to open a new restaurant called Acoustic in the former Zoni Pies location in the Harvester Building downtown Nov. 1.

“Without some major investment, I don’t see there’s any feasible way you can have a profitable business” at Overlook, he said.

Fischer said the cafe did not make a profit when it opened in 2005 but has been in the black recently. The city gets 10 percent of the operator’s net profit, which has been less than $2,000.

The city has had some interest in improving the cafe and hopes to release new details soon, Fischer said. The City Council ultimately would have to approve an agreement.

He also said the city plans to have a restaurant management consultant look at the cafe and determine which type of operations would work best. The historical structure of the facility would add to architectural costs to renovate, but the city has not studied options, Fischer said.

Councilor Kermit Staggers said he’s not familiar with all the details of Falls Overlook Cafe but thinks some of the requirements for cooking might make it difficult for businesses. He hopes to find a way for the cafe to make money for the city.

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“Sometimes, you got to spend money to make money, and we just have to make sure when we spend money we have to end up making money,” he said. “We can spend it quite easily, but making it, that’s something else.”

Teri Schmidt, executive director of the Sioux Falls Convention and Visitors Bureau, said she was sad to see the restaurant close because it serves as an extension of the Falls Park Visitor Center, and it helped keep people in the city longer.

Schmidt said a restaurant there might be the only thing people experience in Sioux Falls. She hopes the city can find a tenant to make it a year-round destination, even if it’s not a full-service restaurant.

“It’s a historic, beautiful building in the heart of the city. Let’s take what it is and market and promote it, do the best with it the kitchen allows,” she said. “I know in the middle of winter, it’s slow for visitors, but I think with the right marketing, promotion and food quality and service it can become another very busy restaurant.”